Today’s Blog – Thursday 19th March 2015

Introduction

Your blogger still seems to be suffering from non-fatal Ebola (otherwise known as a harsh cold) – but has dragged himself into the blogging booth regardless.  Trying to obtain the Karmic benefits of doing so when an ODI is on in Adelaide tomorrow is the aim….

Commodity prices

As at the time of this blog, oil prices have edged up a bit since yesterday, with WTI at US$44.22 and Brent at US$55.86.

Although oil stock numbers were up a bit in the US, to my mind by far the most important news for oil markets was the unexpected re-election of Benjamin Netanyahu in Israel (recognising that he still has to form a coalition, in the usual complicated Israeli fashion).  My view is that this re-election significantly reduces the chances of ~1mmbopd of Iranian crude supplies coming back onto the market any time soon, as Bibi (and importantly his Republican allies in the US) will likely vigorously oppose any reasonable form of a nuclear deal with the Islamic Republic.

The ultimate armageddon for oil markets would be if a deal was done and Bibi felt it was so bad he needed to bomb the Iranian nuclear facilities.  Hello! – Gulf oil stops reaching world markets as the Straits of Hormuz go up in flames.

On that pleasant note, the more prosaic world of the Henry Hub gas price continues to revolve around the weather, with an up-tick to US$2.92 yesterday, following a cold start to Spring.

New South Wales – coal seam gas/coal bed methane

The NSW Govt has continued to tidy up as much of the moose pasture exploration acreage in the State that it can before the election.  The latest deal done was to acquire the permits held by private company Apex Energy (in JV with ASX listed Magnum Gas & Power Ltd (ASX: MGP) just to the South of Sydney.

To date, no deal has been done on acreage that any serious industry player thought was likely to produce any material volumes of gas.

Company news – Beach Energy Ltd (ASX: BPT)

BPT’s new MD, ex-Woodside Rob Cole, has given his first media interview since taking over from the long serving Reg Nelson last week.  Key points:

  • No change in strategy (or need for a wide-ranging review) signalled.
  • A focus on East Coast gas markets, both domgas and LNG, which could be serviced by BPT’s extensive unconventional gas contingent resources in the Cooper Basin.
  • No apparent appetite for international ventures (“no competitive advantage”).
  • A willingness to consider deals (corporate and asset) to bolster existing positions.

“Sensible but boring” would be my characterisation – if I believed that BPT’s Nappamerri Trough gas resources were well placed in the merit order of gas resources to meet East Coast gas markets.  Unfortunately I don’t (CO2 levels, cost of deep wells, flow rates to date, etc).

I think Cole will in fact work this out (if he hasn’t already) and start looking to mirror the strategy of ex-Woodside Dave Maxwell at Cooper Energy Ltd (ASX: COE) – i.e. take positions in conventional gas assets that could serve the East Coast.  An alliance with (or taking over) COE would help with that.

Quote of the day

From the annals of UK satirical magazine, Private Eye:

The Book of Net-An-Yahoo: And Barack, son of Obama, may not looketh so kindly upon our smiting as did Dubya, that is called the Burning Bush.”

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